NEW DELHI: Maruti Suzuki won a vote on Thursday to hand over a mega upcoming factory in Gujarat to parent Suzuki.

Around 90% of shareholders who voted approved the deal, while a majority of minority shareholders abstained from the voting, some of whom had earlier protested against the transfer and called it an "unfair" transaction.

The Gujarat factory premise will start churning out cars from early 2017 and envisages a total investment of Rs 18,500 crore, which would be funded by equity brought in from Suzuki as well as plant depreciation (money set aside will be invested).

Maruti Suzuki hopes to get an additional capacity of 15 lakh cars/year from the plant (to be set-up in phases).

At present, the company has a capacity of 14 lakh cars at two plants in Haryana (Gurgaon and Manesar).

"I have been told that LIC does not vote if they feel that a proposal will not harm their interests," Maruti Suzuki chairman R C Bhargava said, adding that the company had held roadshows in the US, Singapore, Hong Kong, London, Mumbai and Chennai to convince shareholders for approving the deal.

As per the new company law for related-party transactions, nearly 50% of the shareholders (it was 75% in the previous law) had to approve the deal for Suzuki to gain control of the plant.

However, with nearly 6.5 crore of the 13 crore shares abstaining from the voting, the deal was virtually sealed in the parent company's favour.Shareholders owning 6.5 crore shares did participate in the voting. Around 90% (or 5.9 crore shares) approved the deal, while 10% (or 67.5 lakh shares) rejected it.

Under the agreement, Suzuki's subsidiary in Gujarat will do contract manufacturing for Maruti. On the other hand, Maruti will lease the nearly 1,000-acre land at Becharji, on the outskirts of Ahmedabad, to Suzuki.

Bhargava said the transaction is a "win-win situation" for both Maruti and Suzuki. "Our shareholders will gain from this deal as Maruti's huge cash reserves will be used for purposes such as research and development and strengthening of sales operations. Suzuki also gains from this deal as a more profitable Maruti means that it reaps in more profit from its 56% holding in the company."

The company also intends to buy land for setting up dealerships and sales outlets, which would be leased out to retail partners.Share price of the company closed the day on BSE at Rs 4,666, nearly three times than Rs 1,563 closing price on January 29, 2014, when it made the first announcement of shifting the ownership of the plant to Suzuki.

The move had been opposed as a section of minority shareholders felt that it would "turn Maruti into a trading company" while Suzuki got the manufacturing.

Nearly a dozen mutual funds and at least four insurance firms (who had exposure in Maruti) sought a "re-think" on the transaction, saying it was "neither fair" nor in the interests of its minority shareholders. The shareholders said Maruti should use its cash surplus (Rs 9,000 crore then and Rs 13,000 crore now) to fund the expansion.

The opposition and a threat of regulatory and legal action saw the company dilute some of its initial proposal by March 2014, while it also agreed to seek the approval of minority shareholders. The agreement also decided to do away with a "mark up" cost that Maruti would have had to initially pay on every vehicle.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.